July 14 (Bloomberg) -- Losses stemming from Royal Bank of
Scotland Group Plc’s toxic assets have fallen to an estimated 45
billion pounds ($72.5 billion), the Asset Protection Agency said
in its annual report today.

The forecast loss in last year’s agency report was 57
billion pounds, close to the 60 billion-pound “first loss
amount” above which taxpayer-insurance is triggered.

“Improved market conditions and the passage of time have
significantly diminished the risk to H.M. Treasury as an
insurer,” said Stephan Wilcke, the agency’s chief executive
officer, in the report. “Instead of a payout being fifty-fifty
likely under the scheme, we are now well on course for H.M.
Treasury to make an overall 5 billion-pound profit without
having to pay out.”

Potentially toxic RBS assets insured by the British
taxpayer shrank to 182 billion pounds from 234 billion pounds,
the agency said. The agency said that RBS had paid it 2.1
billion pounds, while Lloyds Banking Group Plc, which no longer
uses the program, paid it 2.5 billion pounds.

Commercial real estate loans are the “biggest remaining
vulnerability,” while only a “relatively small portion” of
assets were in troubled euro-zone countries, the report stated.

The APA was created in 2009 as the government was forced to
bail out RBS with a 25.5 billion-pound capital injection. RBS
has cut more than 27,000 jobs and reduced its balance sheet by
almost a trillion pounds since CEO Stephen Hester replaced Fred
Goodwin during the 2008 banking crisis.